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If there's one thing that most Indonesians can agree on, it's the pressing need for new infrastructure. Commuting in Jakarta is an exercise in frustration that reminds me of a Don DeLillo's character's wry take on New York gridlock: "You will hit traffic that speaks in quarter inches." Road congestion isn't the only bottleneck. Indonesia's port capacity is so stretched that some shipping lines avoid direct calls, forcing exporters to transship goods via Singapore. For a fast growing economy like Indonesia's, which is basking in the glow of recent sovereign ratings upgrades, this urgently needs fixing. Last year, the government invited tenders to build a new container port at Tanjung Priok, a colonial-era seaport on Jakarta's northern shoreline. Five consortia put in bids for a project valued at $1.3 billion. Last week, they were told that the deal was off. The reason? The government claimed that it couldn't afford $389 million to upgrade access roads and bridges to the port, so it cancelled the tender.

This comes after several years of repeated promises of public-private partnerships to upgrade Indonesia's decrepit roads, utilities and ports. Similar deals soured in 1997 amid a financial crisis, so the government has had to rebuild its credibility with foreign investors before they commit to new projects. So much for that. According to the Jakarta Globe, the Transport Ministry informed bidders that the port project would be assigned to a state-owned enterprise, presumably a port operator, that would contribute its own finances. So one hand the government is unable to upgrade its roads. Yet its wholly-owned state company is willing to take on the risk. Something doesn't quite add up.

For the bidders, the government is now dangling the consolation prize of another port project outside Jakarta. Some have expressed frustration at the process and warned that Indonesia's image had been damaged. They're also out of pocket after spending on feasibility studies and other bidding procedures. Garibaldi 'Boy' Thohir, a coal-mining tycoon who had formed a consortium with Cosco and Hutchison, told the Jakarta Globe that the cancellation:

Thohir ranked 18th on our list of Indonesia's 40 Richest with an estimated fortune of $1.25 billion. Like most coal miners, he's had to build his own infrastructure to export his product from remote areas. But mining is an exception, not the rule. Most Indonesian entrepreneurs rely on public infrastructure to access national and international markets. As an archipelago, Indonesia needs efficient sea transport to develop its economy (and better roads to circulate goods and people).

Jakarta holds the key to Indonesian logistics. Tanjung Priok currently handles 60% of Indonesia's international container traffic, and is already running over its annual capacity of 5 million twenty-foot equivalent units. Other ports are in a similar predicament after years of underinvestment. The new terminal in Jakarta for which private bids were solicited was supposed to add up to 2 million TEUs of capacity by 2014. Even if a state enterprise does step up to build a terminal (a big if, given their poor performance), the government still needs to improve road access to the port. Expect more frustration and delayed cargoes.